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Debt collector has wrong person and is contacting my employer | Assuming you're in the US, you can file complaints against financial institutions (including debt collectors) through the Consumer Financial Protection Bureau. The link to debt collector complaints is: http://www.consumerfinance.gov/Complaint/#debt-collection |
Why invest for the long-term rather than buy and sell for quick, big gains? | There are many technical answers above , but the short story to me is that very few active fund managers consistently beat the market. Look at the results of actively managed funds. Depending on whose analysis you read, you will find out that somewhere between 80-90% of fund managers in a given year do not beat passive index funds. So go figure how you will do compared to a mutual fund manager who has way more experience than you likely have. So, that in itself is moderately interesting, but if you look at same-manager performance over several consecutive years it is rare to find anyone that goes beats the market for more than a few years in a row. There are exceptions, but go pick one of these guys/gals - good luck. Getting in and out of the market is a loser. This is because there is no way to see market spikes and down turns. There are many behavioral studies that have been done that show people do the wrong thing: they sell after losses have occurred and they buy after the market has gone up. Missing an up spike and not being in before the spike is as devastating as missing a down turn and not getting out in time. There is another down side, if you are trading in a personal account, rather than a tax deferred account, going in and out of stocks has tax complications. In short, a broad based equity index will, over time, beat about anything out there and it will do it in a tax efficient manner. Exchange traded funds (ETFs) are a wonderful way to obtain diversification immediately at very low cost. |
Contract job (hourly rate) as a 1099: How much would I be making after taxes? | If it's just you working, I'd use a ballpark figure of 35% owed - it may be a little high or low, but it's a safe margin to keep set aside for paying your liabilities at the end of the year. |
What is the best way to stay risk neutral when buying a house with a mortgage? | How can one offset exposure created by real-estate purchase? provides a similar discussion. Even if such a product were available in the precise increments you need, the pricing would make it a loser for you. "There's no free lunch" in this case, and the cost to insure against the downside would be disproportional to the true risk. Say you bought a $100K home. At today's valuations, the downside over a given year might be, say, 20%. It might cost you $5000 to 'insure' against that $20K risk. Let me offer an example - The SPY (S&P ETF) is now at $177. A $160 (Dec '14) put costs $7.50. So, if you fear a crash, you can pay 4%, but only get a return if the market falls by over 14%. If it falls 'just' 10%, you lose your premium. With only 5% down, you will get a far better risk-adjusted return by paying down the mortgage to <78% LTV, and requesting PMI, if any, be removed. Even if no PMI, in 5 years, you'll have 20% more equity than otherwise. Over the long term, 5 year's housing inflation would be ~ 15% or so. This process would help insure you are not underwater in that time. Not guarantee, but help. |
Why are some long term investors so concerned about their entry price? | This is not hypothetical, this is an accurate story. I am a long-term investor. I have a bunch of money that I'd like to invest and I plan on spreading it out over five or six mutual funds and ETFs, roughly according to the Canadian Couch Potato model portfolio (that is, passive mutual funds and ETFs rather than specific stocks). I am concerned that if I invest the full amount and the stock market crashes 30% next month, I will have paid more than I had to. As I am investing for the long term, I expect to more than regain my investment, but I still wouldn't be thrilled with paying 30% more than I had to. Instead, I am investing my money in three stages. I invested the first third earlier this month. I'll invest the next third in a few months, and the final third a few months after that. If the stock market climbs, as I expect is more likely the case, I will have lost out on some potential upside. However, if the stock market crashes next month, I will end up paying a lower average cost as two of my three purchases will occur after the crash. On average, as a long-term investor, I expect the stock market to go up. In the short term, I expect much more fluctuation. Statistically speaking, I'd do better to invest all the money at once as most of the time, the trend is upward. However, I am willing to trade some potential upside for a somewhat reduced risk of downside over the course of the next few months. If we were talking a price difference of 1% as mentioned in the question, I wouldn't care. I expect to see average annual returns far above this. But stock market crashes can cause the loss of 20 to 30% or more, and those are numbers I care about. I'd much rather buy in at 30% less than the current price, after all. |
Ideal investments for a recent college grad with very high risk tolerance? | An ideal investment for a highly risk tolerant college grad with a background in software and programming, is a software company. That's because it's the kind of investment that you will be able to judge better than most other people, including yours truly. Hopefully, one day the software company for a highly risk tolerant investor will be your own.(Ask Bill Gates or even Michael Dell, although the latter was more involved in hardware.) |
Why do consultants or contractors make more money than employees? | The "more money" aspect is only true if you ignore the lack of symmetry between employment and contracting. Consulting is another story altogether. Companies are willing to pay consultants for a number of reasons but the most important is deniability. If a decision is recommended and goes wrong then the consultants can be sued. Liability cover is expensive. Cynicism aside, it often isn't cost-effective to keep specialists permanently on the payroll for tasks that are performed once a year. Recently I've noticed that the nature of consulting is changing. Companies are starting to assemble brains-trusts of internal consultants who can create and manage projects while outsourcing only the labour-intensive data-collection roles. Expect this to have a big impact on the management consulting industry. |
Considerations for holding short-term reserves? | It is a dangerous policy not to have a balance across the terms of assets. Short term reserves should remain in short term investments because they are most likely needed in the short term. The amount can be shaved according to the probability of their respective needs, but long term asset variance usually exceed the probability of needing to use reserves. For example, replacing one month bonds paying essentially nothing with stocks that should be expected to return 9% will expose oneself to a possible sudden 50% loss. If cash is indeed so abundant that reserves can be doubled, this policy can be expected to be stable; however, cash is normally scarce. It is a risky policy to place reserves that have a 20% chance of being 100% liquidated into investments that have a 20% chance of declining by approximately 50% just for a chance of an extra 9% annual return. Financial stability should always be of primary concern with rate of return secondary only after stability has been reasonably assured. |
18 year old making $60k a year; how should I invest? Traditional or Roth IRA? | 1) Usually, the choice between Traditional vs. Roth is whether you believe that your tax rate will be higher or lower in the future than it is now. Your income is probably in the 25% bracket now. It's hard to say whether that should be considered "high" or "low". Some people advocate Roth only for 15% bracket; but your income would probably go into higher brackets in the future, so Roth may be preferable from this point of view. Roth IRA also has another advantage that the principal of contributions can be taken out at any time without tax or penalty, so it can serve as an emergency fund just as well as money in taxable accounts. Given that you may not have a lot of money saved up right now, this is useful. 2) In a sense, it's nice to have a mix of Traditional and Roth when you withdraw to hedge against uncertainty in future tax rates and have the option of choosing whichever one is advantageous to withdraw when you need to withdraw. That said, you will likely have many years of access to a 401k and high income in your future working years, in which you can contribute to a Traditional 401k (or if no access to 401k, then Traditional IRA), so a mix will almost certainly happen even if you go all Roth IRA now. 3) I think that depends on you, whether you are a hands-on or hands-off kind of investor. |
MasterCard won't disclose who leaked my credit card details | Others have already commented on the impact of anything which dissuades merchants from raising possible breaches, so I won't dwell on that. Maybe we need stronger legislation, maybe we don't, but it doesn't change today's answer. Often it works the other way around to what you might expect - rather than the merchant noticing and notifying Visa/MC/others, Visa/MC/others spot patterns of suspicious activity (example 1). I don't have any data on the relative numbers of who is being notified/notifying between merchants and payment processors, but at the point when your card is identified as compromised there's no reason to suppose that an individual merchant in the traditional sense has been compromised, let alone identified. In fact because there's a fast moving investigation it could even be a false alarm that led to your card getting cancelled. Conversely it could be a hugely complex multinational investigation which would be jeopardised. It's simply not safe to assume that simply "brand X" has been compromised, therefore everything "brand X" knows about you is also compromised: Furthermore there's no reason to assume the merchant has even admitted to, or discovered the root cause. MC/Visa/Banks, at the point at which they're cancelling cards simply can't say (at least not in a way that might expensively backfire involving lots of lawyers) because the standard of proof needed to go on record blaming someone is simply not yet met. So: yes it's common that you aren't told anything for all of the above reasons. And of course if you really want to find out more you may have some success with your local data protection legislation and formally make a subject access request (or local equivalent) to see what that brings back. Be sure to do it in writing, to the official address of both mastercard and your bank. |
Should I start investing in property with $10,000 deposit and $35,000 annual wage | I want to caveat that I am not an active investor in Australia, you most likely should seek out other investors in your market and ask them for advice/mentorship, but since you came here I can give you some generalized advice. When investing in real estate there are a two main rules of thumb to quickly determine if the property will be a good investment. The 50% rule and the 2% (or 1%) rule. The 50% rules says that in general 50% if the income from the property will go to expenses not including debt service. If you are bringing in $1000 a month 500 of that will go to utilities, taxes, repair, capital expenditures, advertising, lawn care, etc. That leave you with 500 to pay the mortgage and if anything is left that can be cash flow. As this is your first property and it is in " a relatively bad neighbourhood" you might consider bumping that up to 60% just to make sure you have padding. The 1 or 2% rules says that the monthly rent should be 1(or 2) percent of the purchase price in this case the home is bought at 150,000. If the rent is 1,500 a month it might be a good investment but if it rents for 3,000 a month it probably is a good investment. There are other factors to consider if a home meets the 2% rule it might be in a rough neighborhood which increases turnover which in general is the biggest expense in an investment property. If a property meets one or both of these rules you should take a closer look at it and with proper due diligence determine that it is a deal. These rules are just hard and fast guidelines to property analysis, they may need to be adapted to you market. For example these rules will not hold in most (all?) big cities. |
What is the preferred way to set up personal finances? | simplicity and roi are often at odds. the simplest plan that also supports a reasonable investment return would have 3 accounts: if you want to get better returns on your investments, things can get much more complicated. here are some optional accounts to consider: besides the mechanics of money flowing between accounts, a budget helps you understand and control your spending. while there are many methods for this (e.g. envelopes of cash, separate accounts for various types of expenses), the simplest might be using mint.com. just be sure to put all your spending on a credit or debit card, and you can see your spending by category when you log into mint. it can take a bit to get it set up, and your bank needs to be compatible, but it can give you a really good picture of where your money is going. once you know that, you can start making decisions like "i should spend less on coffee", or "i should go to the zoo more", based on how much things cost vs how much you enjoy them. if you feel like your spending is out of control, then you can set yourself hard limits on certain kinds of spending, but usually just watching and influencing your own choices is enough. notes: if you have a spouse or partner, you should each maintain your own separate accounts. there are many reasons for this including simplicity and roi, besides the obvious. if you feel you must have a joint account, be sure to clearly define how it should be used (e.g. only for paying the utilities) and funded (x$ per month each). particularly with your house, do not do joint ownership. one of you should be a renter and the other a landlord. some of these statements assume you are in the usa. on a personal note, i have about 20 credit cards, 2 checking accounts, 2 ira's, 2 brokerage accounts, and 3 401k's. but i consider myself a personal finance hobbyist, and spend an absurd amount of time chasing financial deals and tax breaks. |
Thinking of doing an MBA: Is an $80K top MBA school better than a $24K online MBA school? | I met two MBA graduates from Harvard - both made VPs at large Canadian companies (i.e. $1B or greater annual revenue) after working 2-5 years as management consultants post-graduation - one is now a divisional president making over $500K in salary along. When I asked one of them (one that is not yet making $500K in salary) about the Harvard MBA difference, he said the brand-name and the network probably set it apart from others, since most MBA schools now uses the same material as Harvard's. I tend to agree with his thoughts - I never did felt the caliber of my professor had much to do with my ability to apply what I learn to practical use. In my own MBA education, the professor did more facilitation than "teaching". Apparently that is the norm, as MBA is less about being fed information than it is about demonstrating the ability to analyze and present information. Back to M.Attia's question, I would go with the highest ranked MBA education I could afford (both financially and lifestyle). A friend of mine was able to get his employer to pay for the $90K tuition fee from Rotman, along with job security for 5 years (not a bad idea in this economy). I settled for Lansbridge University in Fedricton because the flexibility of distance learning and cost was important to me, though I was able to get my employer to pay for the MBA after I started (I switched group within the company shortly after I started my MBA and my new boss was able to get the approval without locking me in). |
Why don't banks print their own paper money / bank notes? | Are you talking about printing up more of the same kind of bill, or printing up a different kind of bill? You'll have different answers based on which one you mean. If it's a different kind of bill: Governments don't like competition in this matter. In US history there are examples of the government shutting alternative currencies down. A recent run at an alternative currency is the Liberty Dollar. The similarity is not lost on BitCoin or even Chuck E. Cheese (last one is a satire, but I did worry for a second as I still have a bunch of those tokens!). If it's the same kind of bill: The currency is a tool of the government (in the US) and it does the sourcing for its production. There isn't a whole lot of reason for others to get involved, really. It's special paper, special plates, special presses, special everything, and doing it in one place ensures some consistency of product. There aren't any compelling reason to open up another manufacturing channel to produce exactly the same product. There's no real economic benefit for banks to print their own money. The larger ones play a key role in shaping how much is printed, but actually printing the bills is an offshoot of this. |
Why would I pick a specific ETF over an equivalent Mutual Fund? | There are times when investing in an ETF is more convenient than a mutual fund. When you invest in a mutual fund, you often have an account directly with the mutual fund company, or you have an account with a mutual fund broker. Mutual funds often have either a front end or back end load, which essentially gives you a penalty for jumping in and out of funds. ETFs are traded exactly like stocks, so there is inherently no load when buying or selling. If you have a brokerage account and you want to move funds from a stock to a mutual fund, an ETF might be more convenient. With some accounts, an ETF allows you to invest in a fund that you would not be able to invest in otherwise. For example, you might have a 401k account through your employer. You might want to invest in a Vanguard mutual fund, but Vanguard funds are not available with your 401k. If you have access to a brokerage account inside your 401k, you can invest in the Vanguard fund through the associated ETF. Another reason that you might choose an ETF over a mutual fund is if you want to try to short the fund. |
What are some sources of information on dividend schedules and amounts? | You can use Yahoo! Finance to pull this information in my use. It is listed under Key Statistics -> Dividends & Splits. For example here is Exxon Mobile (XOM): Dividend Payout Information |
What investments are positively related to the housing market decline? | During the actual decline, there's very little money to be made and a lot to lose. When housing prices tank, everybody loses; the banks are exposed to higher risk of mortgage defaults, insurers start having to pay out more for "gas leaks" claiming over-leveraged homes, realtors starve because their commissions go down (even as foreclosures put more homes on the market) and people faced with financial uncertainty will stay put in their current homes instead of moving elsewhere. And homebuilders and contractors go broke because nobody wants to spend cash on a new home or major reno that looks like a losing investment. There can be some bright spots. Smaller hardware stores will make money as people do relatively small DIY projects to improve the condition of their current home. The larger stores get this business too, but it tends to be more than offset by the loss of contractor business (FAR more lucrative, and something the ACEs and True-Values don't really get in on). Of course the "grave-robbers" do well; gold buyers, auctioneers, pawn shops, repo firms; these guys eat well when other people are defaulting on loans or have to sell their stuff for fast cash. Most of these businesses are not publicly traded. One thing that was seen was increased revenues at discount retailers like Wal-Mart, Dollar General etc. When things are bad, people in the middle class who had avoided these stores for image or morality reasons learn to swallow their pride and buy discount store brands for half the price of national brand names. That lessens the blow felt by the discount retailers as overall consumer spending decreases; the pie shrinks, but the discount retailers get a bigger slice of the mandatory spending on food, clothing, etc (and the higher-level retailers get it in the shorts). When the pie starts to grow again as consumer spending picks back up, the discount retailers retain their percentage for a while, as the fickle middle class can afford to buy more from the discount retailer but can't yet afford to take their business back to the shopping mall stores. This produces a flatter, "offset" price graph for discount retailers through the business cycle; they don't lose as early or as much as everyone else in a major downturn, and they turn it around sooner while everyone else may still be on the way down, but as everything gets better for everyone on the upswing it's less great for the discount guys, as they start losing customers and their dollars to competitors with better stuff, even as the ones they keep spend more. This doesn't generally manifest as a true negative correlation, but it can be a good hedge. The number one money-making investment in a tanking economy is gold. When things go down the crapper, everyone wants gold, so if you see the train wreck coming far enough in advance, you can make a big move to gold and really make some money off that investment. For instance, when the first whispers about ARM adjustments and mass defaults reached the public consciousness in mid-2005, gold bullion jumped from about $400 to over $700 in a nine-month period. It cooled off again in 06-07 but only to about $600/oz, and then in late 07 it steadily climbed to peak at $1000/oz; even if you got in late, an investment of $1000 in July '07 in "bulk" gold would have netted you $650 in one year; that's a 65% APY. Then the economy hit bottom and a lot of investors ditched gold for investments they thought would pull back out of their holes quickly; For just a little while in '08 gold was down to $700 again. Then came all the government reports; unemployment not budging, home prices still declining, a lot of banks still hiding just how bad their position was. If you had seen that it was going to be bad, bad, bad, like a lot of now-billionaire hedge fund investors did, a $1000 investment in gold in July 05, and then cashing out at the tops of the peaks and buying back in at the major troughs, would be worth almost $4000 today. That's a 400% return over 7 years, or an annual average yield of 57%. There simply hasn't been anything like that in the last 7 years. |
How does giving to charity work? | I'll answer your second question: it depends what your charity is for. There are two types: i) Emergency (i.e. to respond to environmental or social disasters where it acts a bit like an insurance policy); ii) Development (i.e. where the intention is to subsidise something missing in the local economy); A lack of insurance is certainly a problem for people who lose their homes and livelihoods to disaster. Your donations can go far. As for development aid: "We find little evidence of a robust positive correlation between aid and growth," write two ex-IMF economists, Raghuram Rajan, who stepped down as IMF chief economist at the end of 2006, and Arvind Subramanian, who left the IMF this year. "One of the most enduring and important questions in economics is whether foreign aid helps countries grow ... There is a moral imperative to this question: it is a travesty for so many countries to remain poor if a relatively small transfer of resources from rich countries could set them on the path to growth ... But if there is no clear evidence that aid boosts growth, then handing out more money makes little sense," they conclude. I do somewhat further in declaring that charity is equivalent to trade dumping. By artificially lowering the real cost of a particular good it ensures that there will be no local investment in that good. Free clothes to Africa has destroyed the local textiles industry. Free doctors has resulted in more African doctors in New York than in the whole of Africa. So decide where your charity is going: emergencies or development? Then decide what you can afford. But your first investment should always be in yourself. If by making use of that investment you can benefit the economy and keep others around you employed and productive you will achieve far more. |
Formula that predicts whether one is better off investing or paying down debt | The formula you are looking for is pretty complicated. It's given here: http://itl.nist.gov/div898/handbook/eda/section3/eda3661.htm You might prefer to let somebody else do the grunt work for you. This page will calculate the probability for you: http://stattrek.com/online-calculator/normal.aspx. In your case, you'd enter mean=.114, standard deviation=.132, and "standard score"= ... oh, you didn't say what you're paying on your debt. Let's say it's 6%, i.e. .06. Note that this page will give you the probability that the actual number will be less than or equal to the "standard score". Enter all that and click the magic button and the probability that the investment will produce less than 6% is ... .34124, or 34%. The handy rule of thumb is that the probability is about 68% that the actual number will be within 1 standard deviation of the mean, 95% that it will be within 2 standard deviations, and 99.7% that it will be within 3. Which isn't exactly what you want because you don't want "within" but "less than". But you could get that by just adding half the difference from 100% for each of the above, i.e. instead of 68-95-99.7 it would be 84-98-99.9. Oh, I missed that in a follow-up comment you say you are paying 4% on a mortgage which you are adjusting to 3% because of tax implications. Probability based on mean and SD you gave of getting less than 3% is 26%. I didn't read the article you cite. I assume the standard deviation given is for the rate of return for one year. If you stretch that over many years, the SD goes down, as many factors tend to even out. So while the probability that money in a given, say, mutual fund will grow by less than 3% in one year is fairly high -- the 25 - 35% we're talking here sounds plausible to me -- the probability that it will grow by an average of less than 3% over a period of 10 or 15 or 20 years is much less. Further Thought There is, of course, no provably-true formula for what makes a reasonable risk. Suppose I offered you an investment that had a 99% chance of showing a $5,000 profit and a 1% chance of a $495,000 loss. Would you take it? I wouldn't. Even though the chance of a loss is small, if it happened, I'd lose everything I have. Is it worth that risk for the modest potential profit? I'd say no. Of course to someone who has a billion dollars, this might be a very reasonable risk. If it fails, oh well, that could really cut in to what he can spend on lunch tomorrow. |
Travel expenses for an out-of-state rental | While the question is very localized, I'll answer about the general principle. My main question is with how far away it is (over 1000 miles), how do I quantify the travel expenses? Generally, "necessary and ordinary" expenses are deductible. This is true for business and also true for rentals. But what is necessary and what is ordinary? Is it ordinary that a landlord will manage the property 1000 miles away by himself on a daily basis? Is it ordinary for people to drive 1000 miles every week? I'd say "no" to both. I'd say it would be cheaper for you to hire a local property manager, thus the travel expense would not be necessary. I would say it would be cheaper to fly (although I don't know if its true to the specific situation of the OP, but as I said - its too localized to deal with) rather than drive from Texas to Colorado. If the OP thinks that driving a thousand miles is indeed ordinary and necessary he'll have to justify it to the IRS examiner, as I'm sure it will be examined. 2 trips to the property a year will be a nearly 100% write-off (2000 miles, hotels, etc). From what I understood (and that is what I've been told by my CPA), IRS generally allows 1 (one) trip per year per property. If there's an exceptional situation - be prepared to justify it. Also, keep all the receipts (like gas, hotel, etc.... If you claim mileage but in reality you took a flight - you'll get hit hard by the IRS when audited). Also while I'm up there am I allowed to mix business with pleasure? You cannot deduct personal ("pleasure") expenses, at all. If the trip is mainly business, but you go out at the evening instead of staying at the hotel - that's fine. But if the trip is "business" trip where you spend a couple of hours at your property and then go around having fun for two days - the whole trip may be disallowed. If there's a reasonable portion dedicated to your business/rental, and the rest is pleasure - you'll have to split some of the costs and only deduct the portion attributed to the business activities. You'll have to analyze your specific situation, and see where it falls. Don't stretch the limits too much, it will cost you more on the long run after all the audits and penalties. Can I also write off all travel involved in the purchase of the property? Although, again, the "necessary and ordinary" justification of such a trip is arguable, lets assume it is necessary and ordinary and generally justified. It is reasonable to expect you to go and see the property with your own eyes before the closing (IMHO, of course, I'm not an authority). Such an expense can be either business or investment expense. If its a business expense - its deductible on schedule C. If its an investment expense (if you do buy the property), its added to the cost of the property (capitalized). I'm not a tax adviser or a tax professional, and this is not a tax advice. This answer was not written or intended to be used, and cannot be used, for the purpose of avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code. You should seek a professional consultation with a CPA/Attorney(tax) licensed in your State(s) or a Federally licensed Enrolled Agent (EA). |
ACH processing time of day | Each bank is different, so your question needs to be more specific. For instance, I believe Paypal and Chase settles at 7pm EST on business days. Bank of America at 5PM. |
Taxes on transactions of services | It's called bartering and the IRS has a page titled Four Things to Know About Bartering. The summary is - The bottom line is this is taxable. |
Do you know of any online monetary systems? | This site lets people deposit gold into an account. Once you have an account setup you can pay others in gold online. I haven't used it or know of anyone who has so I cannot provide any feedback to how well it works. |
What is inflation? | When we speak about a product or service, we generally refer to its value. Currency, while neither a product or service, has its own value. As the value of currency goes down, the price of products bought by that currency will go up. You could consider the price of a product or service the value of the product multiplied by the value of the currency. For your first example, we compare two cars, one bought in 1990, and one bought in 2015. Each car has the same features (AC, radio, ABS, etc). We can say that, when these products were new, each had the same value. However, we can deduce that since the 1990 car cost $100, and the 2015 car cost $400, that there has been 75% inflation over 25 years. Comparing prices over time helps identify the inflation (or devaluation of currency) that an economy is experiencing. In regards to your second question, you can say that there was 7% inflation over five years (total). Keep in mind that these are absolute cumulative values. It doesn't mean that there was a 7% increase year over year (that would be 35% inflation over five years), but simply that the absolute value of the dollar has changed 7% over those five years. The sum of the percentages over those five years will be less than 7%, because inflation is measured yearly, but the total cumulative change is 7% from the original value. To put that in perspective, say that you have $100 in 2010, with an expected 7% inflation by 2015, which means that your $100 will be worth $93 in 2015. This means that the yearly inflation would be about 1.5% for five years, resulting in a total of 7% inflation over five years. Note that you still have a hundred dollar bill in your pocket that you've saved for five years, but now that money can buy less product. For example, if you say that $100 buys 50 gallons of gasoline ($2/gallon) in 2010, you will only be able to afford 46.5 gallons with that same bill in 2015 ($2.15/gallon). As you can see, the 7% inflation caused a 7% increase in gasoline prices. In other words, if the value of the car remained the same, its actual price would go up, because the value stayed the same. However, it's more likely that the car's value will decrease significantly in those five years (perhaps as much as 50% or more in some cases), but its price would be higher than it would have been without inflation. If the car's value had dropped 50% (so $50 in original year prices), then it would have a higher price (50 value * 1.07 currency ratio = $53.50). Note that even though its value has decreased by half, its price has not decreased by 50%, because it was hoisted up by inflation. For your final question, the purpose of a loan is so that the loaner will make a profit from the transaction. Consider your prior example where there was 7% inflation over five years. That means that a loan for $100 in 2010 would only be worth $93 in 2015. Interest is how loans combat this loss of value (as well as to earn some profit), so if the loaner expects 7% inflation over five years, they'll charge some higher interest (say 8-10%, or even more), so that when you pay them back on time, they'll come out ahead, or they might use more advanced schemes, like adjustable rates, etc. So, interest rates will naturally be lower when forecasted inflation is lower, and higher when forecasted inflation is higher. The best time to get a loan is when interest rates are low-- if you get locked into a high interest loan and inflation stalls, they will make more money off of you (because the currency has more value), while if inflation skyrockets, your loan will be worth less to loaner. However, they're usually really good about predicting inflation, so it would take an incredible amount of inflation to actually come out on top of a loan. |
Should I pay my Education Loan or Put it in the Stock Market? | I'd recommend hitting the loan the hardest, but getting something invested as well. It's tempting to see these decisions as binary, so it's good to see you wondering if a "mix" is best. I admit to being a spreadsheet junky, but I think this is a good candidate for working up various scenarios to see where the pain/pleasure point is and once you've identified it, move forward with it (e.g., let's say it's a 10K lump sum you're dealing with, what does 5k on the loan and 5k invested look like over the next 6 months, 12 months, 24 months (requires assumptions on investment performance)? What about 6K loan, 4K invested? 7K loan, 3K invested? etc) |
How to divide a mortgage and living area fairly? | I suggest that you first decide on what %'s of the home value you each have a legal claim to. Then split the mortgage using the same %'s. Then, if someone feels their % is slightly higher, they are compensated because they 'own' a correspondingly higher share of the house. Use the same %'s for downpayments (which may mean that an 'adjustment' payment might be required to bring your initial cash outlay from 70/30 into the %'s that you agree to). Tenant income gets split the same way. Utilities are a bit more difficult - as heating depends more on square feet, but water and hydro depend more on how many people are there. You can try to be really precise about working out the %'s, or just keep it simple by using the same %'s as the mortgage. |
What is a good way to keep track of your credit card transactions, to reduce likelihood of fraud? | One trick is to make all purchases end in a particular number of your choosing, say "3". From now on, all restaurant meals,gas purchases, and anything in your control, end them in 3. When you glance at the bill, you can skip these charges, and look carefully at the rest. It's not 100%, as you couldn't easily impact supermarket charges and many others, but it's half of my routine charges. |
Can after-hours trading affect options pricing? | There is a white paper on "The weekend effect of equity options" it is a good paper and shows that (for the most part) option values do lose money from Friday to Monday. Which makes sense because it is getting closer to expiration. Of course this not something that can be counted on 100%. If there is some bad news and the stock opens down on a Monday the puts would have increased and the calls decreased in value. Article Summary (from the authors): "We find that returns on options on individual equities display markedly lower returns over weekends (Friday close to Monday close) relative to any other day of the week. These patterns are observed both in unhedged and delta-hedged positions, indicating that the effect is not the result of a weekend effect in the underlying securities. We find even stronger weekend effects in implied volatilities, but only after an adjustment to quote implied volatilities in terms of trading days rather than calendar days." "Our results hold for puts and calls over a wide range of maturities and strike prices, for both equally weighted portfolios and for portfolios weighted by the market value of open interest, and also for samples that include only the most liquid options in the market. We find no evidence of a weekly seasonal in bid-ask spreads, trading volume, or open interest that could drive the effect. We also find little evidence that weekend returns are driven by higher levels of risk over the weekend. "The effect is particularly strong over expiration weekends, and it is also present to a lesser degree over mid-week holidays. Finally, the effect is stronger when the TED spread and market volatility are high, which we interpret as providing support for a limits to arbitrage explanation for the persistence of the effect." - Christopher S. Jones & Joshua Shemes You can read more about this at this link for Memphis.edu |
In Australia, how to battle credit card debt? | Short-term, getting a balance transfer will help. It'll reduce the interest you pay. You can also reduce the interest you pay on your cars if you are able to consolidate your debt into a personal loan. To your question about debt consolidation companies, as far as I know, that's all they do. However, long-term, there's only two ways to stay on top of debt: increase your income, or reduce your spending. Basically, if you can't or won't get a raise or a job that pays more (or a second job), you need to cut back on your spending. You might need to do something radical, like move somewhere with cheaper rent (as long as increased travel costs doesn't offset the saving). But you'll be much better off in the long run if you step back and take a look at your situation now, and make adjustments accordingly. |
Deceived by car salesman | At this point there is not much you can do. The documentation probably points to you being the sole owner and signer on the loan. Then, any civil suit will degenerate into a "he said, she said" scenario. Luckily, no one was truly harmed in the scenario. Obtaining financing through a car dealer is almost always not advisable. So from here, you can do what should have been done in the first place. Go to banks and credit unions so your daughter can refinance the car. You will probably get a lower rate, and there is seldom a fee. I would start with the bank/CU where she does her checking or has some other kind of a relationship. If that fails, anywhere you can actually sit and talk with a loan officer is preferable over the big corporate type banks. Car dealers lying is nothing new, it happens to everyone. Buying a car is like a battle. |
How to calculate tax amounts withheld on mixed pre-tax and Roth 401(k) contributions, and match? | Its easier than that: employer matching contributions are always pre-tax. While your contribution is split between the pre-tax and the Roth post-tax parts, matching contributions are always pre-tax. Quote from the regulations I linked to: For example, matching contributions are not permitted to be allocated to a designated Roth account. So the tax you pay is only on the Roth portion of your contribution. One of the reasons for that is the complexity you're talking about, but not only. Matching is not always vested, and it would be hard to determine what portion to tax and at what rate if matching would be allowed to go to Roth. |
Do gift cards expire? Does a gift certificate's value depreciate? How long can I keep them for? | It depends on: In Canada, Ontario, Manitoba, Alberta and Nova Scotia have each enacted legislation to stop gift cards/certificates from expiring. Cards issued before the effective date are still subject to the old rules. The legislation came into effect: There are several common themes: There are still some unusual exemptions such as mall gift cards in Ontario, Manitoba: Ontario is the first jurisdiction in Canada to regulate gift cards. [...] Mall cards (e.g. Eaton Centre gift card) will be covered by the expiry date ban and the new disclosure rules. However, these cards can temporarily maintain their current fee structure while the provincial government examines options on how to best regulate these types of cards. This will allow more time to develop an approach that strikes the right balance for consumers and businesses. For specific details see the appropriate link. |
What is a “retail revolving account,” and does it improve my credit score? | To add to what others have said, INSTALLMENT CREDIT is a stronger factor when building credit. An installment credit is essentially a loan with a fixed repay amount such as a student loan and a car loan. Banks (when it comes to buying your first home) want to see that you are financially able to repay a big debt (car loan). But be careful, if you cannot pay cash, you cannot afford it. My rule of thumb is that when I'm charging something to my CC, I MUST pay it off when it posts to my account. I just became debt free (paid off about 15k in CC and student loan debt in 18 months) and I love it. |
How do historically low interest rates affect real estate prices? | The article John cites says no correlation, but this chart from the article says otherwise; One sees the rate drop from 14% to 4% and housing rise from an index of 50 to near 190. (reaching over to my TI BA-35 calculator) I see that at 14%, $1000/mo will buy $84,400 worth of mortgage, but at 4%, it will buy $209,500. 2-1/2 times the borrowing power for the same payment. But wait, my friends at West Egg tell me that inflation means I can't compare $1000 in 1980 to the same $1000 in 2010. The $1,000 inflates to $2611 (i.e. an income rising only with inflation, no more) and that can fund a mortgage for $546,900. This is 6.5 times the original borrowing power, yet the housing index 'only' rose 3.8X. See that crazy chart? Housing actually got cheaper from 1980 to the peak. Statistics can say whatever you wish. Interest rate change drove all the change in housing prices, but not quite as much as it should have. To answer your question - I expect that when rates rise (and they will) housing prices will take a hit. In today's dollars, a current $1000 borrows (at 4%) nearly $210K, but at 6%, just $167K. If rates took a jump from these record lows, that's the nature of the risk you'd take. |
Can I pay taxes using bill pay from my on-line checking account? | And if you need to pay business taxes outside of the regular US 1040 form, you can use the IRS' Electronic Federal Tax Payment System (EFTPS). Basically, you enroll your bank accounts, and you can make estimated, penalty, etc. payments. The site can be found here. |
why do energy stocks trade at lower prices compared to other sectors? | Large-scale price range of a stock isn't directly meaningful; that reflects how many shares exist, not just how desirable they are. A stock split, for example, doubles the number of shares everyone holds while cutting the value of each share in half; that's meaningless except that it makes the shares a bit easier to trade in. Change in price is more interesting. In the case of energy companies, that often reflects major changes in energy supply, distribution, use, or how well positioned people feel the company is for the next change in these. Fracking's surge and the questions raised against it, whether a major pipeline will or won't be built, international energy price trends, breakthroughs in renewables... if it might affect energy price, it might affect the company's strength, both absolute and relative to others. In other words, the same kinds of things that affect any stock. |
How are unmarketable market orders (other side of the order book is empty) matched with incoming orders? [duplicate] | I don't have all the answers. On a illiquid stock, such situations do arise and there are specific mechanisms used by exchanges to match the order. It is generally not advisable to use market order on illiquid stock. There are lots of different variations here. I guess this comes down to specifications for individual exchanges, but I'm wondering if there's a standard here or a way to approach it from basic rules that clears up all these situations. There are quite a few variations and different treatments. Market order that are placed when the market is closed or just around market opening are traded at Market Open price that each exchange has a formulae to calculate. In the process Market Buy are matched to Market Sell at the Exchange calculated price. Not all order get matched and there could be spill over's. These are then matched to limit orders. Is this determined based on which sell order came first, or based on which would result in the best deal for the incoming buyer? Generally Market orders have highest priority of execution. |
How do rich people guarantee the safety of their money, when savings exceed the FDIC limit? | I found out there is something called CDARS that allows a person to open a multi-million dollar certificate of deposit account with a single financial institution, who provides FDIC coverage for the entire account. This financial institution spreads the person's money across multiple banks, so that each bank holds less than $250K and can provide the standard FDIC coverage. The account holder doesn't have to worry about any of those details as the main financial institution handles everything. From the account holder's perspective, he/she just has a single account with the main financial institution. |
Source of income: from dividends vs sale of principal or security | All that it is saying is that if you withdraw money from your account it doesn't matter whether it has come from dividends or capital gains, it is still a withdrawal. Of course you can only withdraw a capital gain if you sell part of the assets. You would only do this if it was the right time for you to sell the asset. |
How to realize capital gains before going from non-resident alien to resident alien in USA | This will work as intended, but there's another point to consider. In the US, the tax rate on proceeds from stock sales is higher for short term holdings, which are defined as held for less than one year. Both rates vary based on your income. Bracket numbers are for fiscal year 2014, filing as single. The difference between short and long term capital gains tax in the US is a minimum of ten percentage points, and works out to 15 percentage points on average. This is substantial. If you won't be reporting much income the year you move to the US (say because you only worked for a portion of the year) it is decidedly to your advantage to wait and sell the stocks in the US, to get that sweet 0% rate. At a minimum, you should hold the position for a year if you sell and rebuy, from a tax optimization perspective. Two caveats: |
Book capital losses in gnucash | According to the gnucash guide, losses are recorded as negative transactions against Income:Capital Gains. I've followed this model in the past when dealing with stocks and commodities. If on the other hand, you're talking about an asset which could normally follow a depreciation schedule, you might want to look at the section in the business guide dealing with asset depreciation. |
Does an index have a currency? | In practice, most (maybe all) stock indices are constructed by taking a weighted average of stock prices denominated in a single currency, and so the index implicitly does have that currency - as you suggest, US dollars for the S&P 500. In principle you can buy one "unit" of the S&P 500 for $2,132.98 or whatever by buying an appropriate quantity of each of its constituent stocks. Also, in a more realistic scenario where you buy an index via a tracker fund, you would typically need to buy using the underlying currency of the index and your returns will be relative to that currency - if the index goes up by 10%, your original investment in dollars is up by 10%. |
Beginner dividend investor - first steps | How do I start? (What broker do I use?) We don't make specific recommendations because in a few years that might not be the best recommendation any more. You are willing to do your own research, so here are some things to look for when choosing a broker: What criticism do you have for my plan? Seeking dividend paying stock is a sensible way to generate income, but share prices can still be very volatile for a conservative investor. A good strategy might be to invest in several broad market index and bond funds in a specific allocation (for example you might choose 50% stocks and 50% bonds). Then as the market moves, your stocks might increase by 15% one year while bonds stay relatively flat, so at the beginning of the next year you can sell some of your stocks and buy bonds so that you are back to a 50-50 allocation. The next year there might be a stock market correction, so you sell some of your bonds and buy stock until you are back to a 50-50 allocation. This is called rebalancing, and it doesn't require you to look at the market daily, just on a regular interval (every 3 months, 6 months, or 1 year, whatever interval you are comfortable with). Rebalancing will give you greater gains than a static portfolio, and it can insulate you from losses when the stock market panics occasionally if you choose a conservative allocation. |
What should I be doing to protect myself from identity theft? | Here are a handful of measures I take myself: I check my credit reports once in a while and look for anything out of the ordinary. If somebody calls me on the telephone claiming to be from my bank or credit card company, utility, etc. I ask for their number, check it, and call them back. I don't give personal information to people merely claiming to be from a place I do business with. I never fill out ballots for free contests. Most of the time these are scams. When I get a call telling me "you won a free cruise" for a ballot I supposedly filled out at the mall, I say they're lying through their teeth. For excitement, I'll sometimes buy a lotto ticket instead. I'm careful when I surf the web. I don't give my personal information to web sites I can't trust. If they look the least bit shady, I'm out. Also, I use different passwords at different web sites. I avoid using a password from a public terminal, but when I must, I change my password soon after. I'm careful when I download software. I don't install anything I didn't get from a trusted source. I pay for software when necessary, so finding a trusted source is not hard. But, I've heard of people who – to save a buck – would download a pirated application from a shady warez site only to be "gifted" a trojan horse key logging or other spyware along with it. When I no longer need a bill, receipt, statement, etc. or any document containing personal information, I shred it, and I use a shredder that does a micro-cut, not just a strip- or cross-cut. The micro-cut remains go in the green bin with wet and yucky organic waste. When I no longer need a hard drive, I use a secure wiping tool like Darik's Boot & Nuke before reusing. If the drive isn't worth reusing, I'll wipe first then take apart with my Torx screwdriver. Once I have the drive platter, I scratch the heck out of it. Remains go to the community recycling depot. That's all I can think of right now; I probably missed a few :-) So, what do others do? I'm curious, too. |
Should I stockpile nickels? | It seems like a lot of hassle to make a few bucks. $1,000 in nickels would weight 100kg. I'd rather put my money in ING or into a bond mutual fund like VBMFX. |
Net Cash Flows from Selling the Bond and Investing | Investopedia has a good explanation of the term shorting which is what this is. In the simplest of terms, someone is borrowing the bond and selling it with the intent to replace the security and any dividends or coupons in the end. The idea is that if a bond is overvalued, one may be able to buy it back later for a cheaper price and pocket the difference. There are various rules about this including margin requirements to maintain since there is the risk of the security going up in price enough that someone may be forced into a buy to cover in the form of a margin call. If one can sell the bond at $960 now and then buy it back later for $952.38 then one could pocket the difference. Part of what you aren't seeing is what are other bonds doing in terms of their prices over time here. The key point here is that brokers may lend out securities and accrue interest on loaned securities for another point here. |
How does a bank make money on an interest free secured loan? | Very good answers as to how 0% loans are typically done. In addition, many are either tied to a specific large item purchase, or credit cards with a no interest period. On credit card transactions the bank is getting a fee from the retailer, who in turn is giving you a hidden charge to cover that fee. In the case of a large purchase item like a car, the retailer is again quite likely paying a fee to cover what would be that interest, something they are willing to do to make the sale. They will typically be less prone to deal as low a price in negotiation if you were not making that deal, or at times they may offer either a rebate or special low to zero finance rates, but you don't get both. |
What types of careers consistently make the most money entering with no background or social skills? | You may think it sucks to have learned a crap ton of category theory, which is seemingly useless outside of academia, but have you considered picking up a "functional" programming language, e.g. Haskell? How about Java or, more recently, Scala? I would bet that you would love Haskell. And then you can make a fortune working at Jane Street Capital, which uses OCaml, another functional programming language. Time to get your hands dirty with some programming experience. Minimal social skills required, as you had wished for, plus maximal compensation, plus you get to keep using math that was sort of close to your research area. Good luck. |
Does the USA have a Gold reserve? | The United States is no longer on a gold standard, and the value of its currency is solely founded on the productivity of its economy. So I don't think there's any practical reason for the United States government to explicitly sell off a lot of gold to force the price to crash. In fact I would expect that the price of gold has very little interest for the Fed, or anyone else in a position of economic power in the government. I believe that we still have large reserves of it, but I have no idea what they are intended for, aside from being a relic of the gold standard. Best guess is that they'll be held on to just in case of an international trend back towards the gold standard, although that is unlikely on any time frame we would care about. |
Best Time to buy a stock in a day | One of the biggest laws in economics is that if an opportunity is very profitable and is very easily exploitable even by complete beginners, then it will very soon stop being profitable. That's how the market works. If you buy stock when it is at the lowest, then you are making money, but most of the time someone else is losing money. And if there was a magic hour of the day when buying would be the most profitable, then soon everybody would want to buy at that time and no one would want to sell anything, so the scheme would collapse. |
Why does an option lose time value faster as it approaches expiry | If you think about it, the value of an option comes from the chance that the price at the expiration date can exceed the strike price. As it gets closer to the expiration date, the chance is getting smaller, because there is simply not enough time for an out-of-money option to hit that strike. Therefore, the value of an option decays. |
Get free option quotes | A number of sites provide delayed option chains online. Yahoo Finance is one example: I linked to Apple's chain, but to get one yourself, put the ticker you want in the search box, then click the "options" link in the sidebar that I called out in the image. |
What are the options for a 19-year-old college student who only has about $1000? | $1000 is not that much, and I think the best you can do with them is keeping them in a high-yield savings account (look at the online savings accounts that give 1% and more, not the regular bank savings accounts which are worthless). If you need money all of a sudden (for a school book, or rent, or bills, or some other emergency expense), you don't want to deal with selling stocks or funds (which may be at loss) or breaking into your CD's. It is usually considered a good practice to keep cash that would keep you afloat for 5-6 months in savings or some cash equivalent, as an emergency fund. |
How do I find an ideal single fund to invest all my money in? | Not sure what your needs are or what NIS is: However here in the US a good choice for a single fund are "Life Cycle Funds". Here is a description from MS Money: http://www.msmoney.com/mm/investing/articles/life_cyclefunds.htm |
How important is disability insurance, e.g. long-term, LTD? Employer offers none | The reason to have disability insurance is to replace your income if you become disabled and are no longer able to work. For this purpose, it is kind of similar to life insurance where you want to replace your income to take care of people that depend on your income if you die, but now you are included in the people that depend on your income. If your employer doesn't provide any disability insurance then it would be wise to look for some Long Term disability insurance. Short Term disability is more expensive than long term and it is USUALLY better and cheaper to have a good emergency fund to provide for a short term disability such as being sick for a month and not able to work than to buy short-term. As a web developer - you should be able to get long term disability insurance at a reasonable cost, unless you have some dangerous hobbies like forest fire fighting or shark juggling. |
Under specific conditions can I write off Spotify or other streaming audio services? | Nice try. No. If you were in the music industry, you might have a case. Depending on the exact job, certain things related to music would be a business expense. I don't see how this would pass an audit as it really is unrelated to the work you do. |
A guy scammed me, but he gave me a bank account number & routing number. Can I use that to take out what he owes me? | A routing number and account number are on the bottom of every check. If anybody who ever handled your checks or even saw your checks could just withdraw as much money as they wanted, the whole banking system would need to be reworked. In short, just having that info is not enough. Not legally. |
What is the point of the stock market? What is it for, and why might someone want to trade or invest? | I rather like The Ascent of Money, by Niall Ferguson. This comes in several formats. There's a video version, a written version (ISBN-13: 978-1594201929), and an audio version. This book covers the history of financial instruments. It covers the rise of money, the history of bonds and stocks, insurance and hedge funds, real-estate, and the spread of finance across the world. It is a great introduction to finance, though its focus is very definitely on the history. It does not cover more advanced topics, and will not leave you with any sort of financial plan, but it's a great way to get a broad overview and historical understanding of money and markets. I strongly recommend both the video and the written or audio version. |
What's a normal personal debt / equity ratio for a highly educated person? | The problem with having no debt at all and relying totally on your income from working is that if you lose your job you'll have no income. Now there are 2 types of debt: good debt and bad debt. You should stay away from bad debt. But good debt is good — it should produce an income higher than the interest payments on the debt. Good debt will help you supplement your income from work and eventually replace your income from work. I have over $2M in good debt, have been semi-retired since 42, and sleep very well at night. By the way I also have zero bad debt. As Joe says, you have to be at a level you are comfortable with, can sleep at night, and try to limit your bad debt by showing some delayed gratification when you are starting off. |
Is there a simple strategy of selling stock over a period of time? | Yes, there is an analogous strategy for selling: it's to sell a fixed number of shares per period of time. |
I'm thinking of getting a new car … why shouldn't I LEASE one? | I have an eight year old Kia Spectra that my wife is after me to replace -- but it hadn't been giving me any trouble at all. Soon after she started telling me I should replace it soon it started having problems; compressor, tires, and so on. How did she know? Anyway, so now I'm looking -- not ready to buy yet, but I'm looking. The reason I won't be leasing is mileage. I live 45 miles from where I work, so with incidental driving, I put at least 100 miles a day on a car. That's about 26,000 miles a year if I do nothing but drive back and forth to work. On a monthly basis the lease is advertised as being less than most payments, but that is with a mileage limitation. Since most leases I've looked at top out the mileage well below that mark I won't be leasing. I am looking at the new cars that are available now -- but I don't plan on buying until next year, and buying a lightly used car that is only a year to two old. So I'm looking at what I will be buying while I can still find information about them. So yeah, mileage is a strong reason why I'm not considering leasing. |
Is there a general guideline for what percentage of a portfolio should be in gold? | The "conventional wisdom" is that you should have about 5% of your portfolio in gold. But that's an AVERAGE. Meaning that you might want to have 10% at some times (like now) and 0% in the 1980s. Right now, the price of gold has been rising, because of fears of "easing" Fed monetary policy (for the past decade), culminating in recent "quantitative easing." In the 1980s, you should have had 0% in gold given the fall of gold in 1981 because of Paul Volcker's monetary tightening policies, and other reasons. Why did gold prices drop in 1981? And a word of caution: If you don't understand the impact of "quantitative easing" or "Paul Volcker" on gold prices, you probably shouldn't be buying it. |
What is meant by “priced in”? | Priced in just means that the speaker thinks the current price has already taken that factor into account. For example, the difference in price right before and right after a dividend is released often differ exactly by that dividend -- the fact that the dividend would function as a "relate" on the purchase price was priced into the earlier quote, and its absence for another year was priced into the later quote. The ten can be applied to any expected or likely event, if you really think the price reflects that opportunity of risk. It just means that this factor, in the speaker's opinion, doesn't create an opportunity one can take advantage of. |
Is Cost of Living overstated? | You mention: High rent places are usually also high property value places. Given the tax incentives, it seems like a good long term idea to grab a house, so if we assume you have the option of working and buying a house in a high CoL or a low CoL city, I think you'd prefer the high cost. Because essentially, after 30 years, you'd have a million dollar house vs a quarter million dollar house. You've captured three quarters of a million dollars in rent, given my napkin math hypothetical. I think you're forgetting about some of the associated costs with "owning" a home, including: |
Does a failed chargeback affect my credit score? | I think your confusion comes from the negative impact when a creditor writes off your bad credit and ceases attempting to collect it. "Chargebacks" as you call them are an attempt to undo fraudulent charges on your card, whether from stolen credit card info or from a merchant who is using shady business practices. For what it's worth, if you joined on December 20, January 20 seems like a reasonable date for the next billing cycle, with the December 31 date reflecting the fact that their system couldn't automatically bill you the day you joined. I also think it's reasonable for you to ask them to refund the bill for the second month if you do not plan to use their gym further. So the dispute seems like a reasonable one on both sides. Good luck. |
How to make use of EUR/USD fluctuations in my specific case? | I would make this a comment but I am not allowed apparently. Unless your continent blows up, you'll never lost all your money. Google "EUR USD" if you want news stories or graphs on this topic. If you're rooting for your 10k USD (but not your neighbors), you want that graph to trend downward. |
Why are stocks having less institutional investors a “good thing”? | Institutional investors are the "elephant" in the room. When they "sneeze," everyone else "catches cold." They're fine, if they're buying after YOU do. They're not bad, if you want to buy after they sell en masse. But when you read about moves of 10 percent, 15 percent or more in a single day, it's because a bunch of institutional investors all decided to do the same thing on the same day. That's more volatility than most people can stomach. Fewer institutional investors in a stock mean fewer chances of those things happening. |
How big of a mortgage can I realistically afford? | My primary concerns. There seems to still be a fair bit of distressed property (forclosures etc) on the market at current, which might well keep prices down for the next year or so that it takes to finish flushing that stuff out of the market. The gist I get from most experts/pundits is that There will be good deals around for while to come still I'd advise you wait. Go ahead and do the math to figure out what total you WOULD be paying would be, and charge yourself that much a mohth for rent in your current place, pocketing the difference in a savings account. You'll be able to get a feeling for what it's like to live with that kind of house payment, and if you can do it sans any room-mate (something you can't always count on) If you can manage it, then you have a much more realistic idea of what you can afford, AND you'll have saved up a bunch of money to help with a down-payment in the process. If for example your Mortgage plus taxes and insurance ends up running around say $1450 a month, plus another $150 for the HOA, well then, that's charging yourself $1600 a month for your 'rent' which means $1000 per month going into the bank, in two years that's nearly the same as what you have now in the $401K, and you'd have a really good idea if you can afford that much per month in housing costs. If you are bound and determined to do this now, then here's a few other things to consider. You might to shop around a bit to see how typical those HOA fees are. Yeah you don't have the expense and hassle of needing to mow the lawn, paint the place etc but still, 150 a month translates to around another 1.5 mortgage payments a year. You might be able to get around PMI by splitting the mortgage into two pieces and doing a 'purchase money second' of around 15-20% and 75-70% of the value for the main mortgage. That way the LoanToValue on your primary loan is under 80%, which could be worthwhile even if the interest rate on that second loan is a little higher (at least it's deductible, paying PMI is just money lost to you) although trying to do any kind of creative financing these days is a lot trickier |
How to motivate young people to save money | Although my kid just turned 5, he's learning the value of money now, which should help him in the future. First thing, teach him that you exchange money for goods and services. Let him see the bills, and explain what they're for (i.e. "I pay ISP Co to give us Internet; that lets us watch Youtube and Netflix, as well as play games with Grandma on your GameStation"). After a little while, they will see where it goes, and why. Then you have your automatic bills, such as mortgage payments. I make a habit of taking out the cash after I get paid, and my son comes with me to the bank where I deposit it again (I get paid monthly, so it's only one extra withdraw). He can physically see the money, and understand that if the stack is gone, it's gone. Now that he is understanding things cost money, he wants to make money himself. He volunteers to help clean up the kitchen and vacuum rooms in the house, usually without being asked. I give him a dollar or two for the simple chores like that. Things like cleaning his room or his own mess, he does not get paid for. He puts all his money into his piggy bank, and he has some goals in mind: a big fire truck, a police helicopter, a pool, a monster truck, a boat. Remember he's only 5. He has his goals, and we have the money he's been saving up. We calculate how many times he needs to vacuum the living room, or clean up dishes, to get there, and he realizes it takes a long time. He looks for other ways to make money around the house, and we come up with solutions together. I am hoping in a year or two that I can show him my investments and get him to understand why they make or lose money. I want to get him in to the habit of investing a little bit every few months, then every month, to help his income grow, even if he can't touch the money quite yet. |
How does per-annum depreciation for taxes work after the first year of depreciation? | The first method is the correct one. You bought an asset worth of $1000 and you put it on your depreciation schedule. What it means is that you get to write off the $1000 over a certain period of time (and not at once, as you do with expenses). But the value you're writing off is the $1000 regardless of how much you've written off already. Assume you depreciate in straight line over 5 years (that's how you depreciate computers for Federal tax purposes, most states follow). For the simplicity of the calculation, assume you depreciate each year as a whole year (no mid-year/mid-quarter conventions). The calculation is like this: If you sell the computer - the proceeds above the adjusted basis amount are taxed as depreciation recapture up to the accumulated depreciation amount, and as capital gains above that. So in your case - book value is the adjusted basis at the end of the year (EOY), depreciation this year is the amount you depreciate in the year in question out of the total of the original cost, and the accumulated depreciation is the total depreciation including the current year. In Maryland they do not allow depreciating to $0, but rather down to 25% of the original cost, so if you bought a $1000 computer - you depreciate until your adjusted basis is $250. Depreciation rates are described here (page 5). For computers (except for large mainframes) you get 30% depreciation, with the last year probably a bit less due to the $250 adjusted basis limitation. |
Can I deduct equipment expenses for a job I began overseas? | I'm not an expert, but here's my $0.02. Deductions for business expenses are subject to the 2% rule. In other words, you can only deduct that which exceeds 2% of your AGI (Adjusted Gross Income). For example, say you have an AGI of $50,000, and you buy a laptop that costs $800. You won't get a write-off from that, because 2% of $50,000 is $1,000, and you can only deduct business-related expenses in excess of that $1,000. If you have an AGI of $50,000 and buy a $2,000 laptop, you can deduct a maximum of $1,000 ($2,000 minus 2% of $50,000 is $2,000 - $1,000 = $1,000). Additionally, you can write off the laptop only to the extent that you use it for business. So in other words, if you have an AGI of $50,000 and buy that $2,000 laptop, but only use it 50% for business, you can only write off $500. Theoretically, they can ask for verification of the business use of your laptop. A log or a diary would be what I would provide, but I'm not an IRS agent. |
Can I profit from anticipating a drop in value? | Purchasing an option to sell the stock is probably the safest bet. This gives you reasonable leverage, and your risk is limited to the cost of the option. Say the stock currently sells for $100 per share. You think it will drop to $80 per share in the next two weeks and the market thinks the price will be stable. Now, consider an option to sell one share of that stock for $95 any time within the next two weeks. The market would consider that option nearly worthless, since in all likelihood, you would lose out by exercising it (since you could just sell the share on the market for a price expected to be higher than that). You might be able to acquire that option for $5. Now, say you're right and within two weeks, the price drops to $80. Now you can purchase a share for $80, exercise the option to sell it for $95, and pocket $15. That would make you a $10 profit on a $5 investment. If you're wrong, you just let the option lapse and are out $5. No problem. In reality, you would buy a number of such options. And you wouldn't actually buy a share and exercise the option, you would just sell the option back to its issuer for $15. |
Is there such a thing as a deposit-only bank account? | I would suggest opening a bank account that you use to accept deposits only, and then get a system set up where it automatically transfers the money over to your main account. If not instantly it could transfer the money hourly or daily. Of course you would have to pay a premium for this "peace of mind" ;) |
Would I ever need credit card if my debit card is issued by MasterCard/Visa? | You ask about the difference between credit and debit, but that may be because you're missing something important. Regardless of credit/debit, there is value in carrying two different cards associated with two different accounts. The reason is simply that because of loss, fraud, or your own mismanagement, or even the bank's technical error, any card can become unusable for some period of time. Exactly how long depends what happened, but just sending you a new card can easily take more than one business day, which might well be longer than you'd like to go without access to any funds. In that situation you would be glad of a credit card, and you would equally be glad of a second debit card on a separate account. So if your question is "I have one bank account with one debit card, and the only options I'm willing to contemplate are (a) do nothing or (b) take a credit card as well", then the answer is yes, take a credit card as well, regardless of the pros or cons of credit vs debit. Even if you only use the credit card in the event that you drop your debit card down a drain. So what you can now consider is the pros and cons of a credit card vs managing an additional bank account -- unless you seriously hate one or more of the cons of credit cards, the credit card is likely to win. My bank has given me a debit card on a cash savings account, which is a little scary, but would cover most emergencies if I didn't have a credit card too. Of course the interest rate is rubbish and I sometimes empty my savings account into a better investment, so I don't use it as backup, but I could. Your final question "can a merchant know if I give him number of debit or credit card" is already asked: Can merchants tell the difference between a credit card and embossed debit card? Yes they can, and yes there are a few things you can't (or might prefer not to) do with debit. The same could even be said of Visa vs. Mastercard, leading to the conclusion that if you have a Visa debit you should look for a Mastercard credit. But that seems to be less of an issue as time goes on and almost everywhere in Europe apparently takes both or neither. If you travel a lot outside the EU then you might want to be loaded down with every card under the sun, and three different kinds of cash, but you'd already know that without asking ;-) |
Should I invest in my house, when it's in my wife's name? | The prenup complicates things. The traditional vow of a marriage is "What's mine is yours, what's yours is mine". With such a traditional marriage it doesn't matter too much which partner's name something is in, in the event of a divorce the assets of the couple would be considered as a whole and then split. But you have a prenup which is presumably intended to change this traditional arrangement (and may or may not actually be enforceable). I think you are as such right to be wary. I think your only way forward long term is to amend the prenup and/or the legal status of the house to recognize it as a shared asset that you will both be contributing to and that it's value should be split in some way in the event of a divorce. In exchange you should probably be contributing some or all of the cash pile you have from selling your house to the common pot. Another loan may seem like a good option in the short term but in the long term the appreciation on a house is likely to be worth more than any interest on the loan (assuming you are using an interest rate comparable to commercial mortgage deals), plus any interest may well end up being taxable. |
Can we estimate the impact of a large buy order on the share price? | There are two distinct questions that may be of interest to you. Both questions are relevant for funds that need to buy or sell large orders that you are talking about. The answer depends on your order type and the current market state such as the level 2 order book. Suppose there are no iceberg or hidden orders and the order book (image courtesy of this question) currently is: An unlimited ("at market") buy order for 12,000 shares gets filled immediately: it gets 1,100 shares at 180.03 (1,100@180.03), 9,700 at 180.04 and 1,200 at 180.05. After this order, the lowest ask price becomes 180.05 and the highest bid is obviously still 180.02 (because the previous order was a 'market order'). A limited buy order for 12,000 shares with a price limit of 180.04 gets the first two fills just like the market order: 1,100 shares at 180.03 and 9,700 at 180.04. However, the remainder of the order will establish a new bid price level for 1,200 shares at 180.04. It is possible to enter an unlimited buy order that exhausts the book. However, such a trade would often be considered a mis-trade and either (i) be cancelled by the broker, (ii) be cancelled or undone by the exchange, or (iii) hit the maximum price move a stock is allowed per day ("limit up"). Funds and banks often have to buy or sell large quantities, just like you have described. However they usually do not punch through order book levels as I described before. Instead they would spread out the order over time and buy a smaller quantity several times throughout the day. Simple algorithms attempt to get a price close to the time-weighted average price (TWAP) or volume-weighted average price (VWAP) and would buy a smaller amount every N minutes. Despite splitting the order into smaller pieces the price usually moves against the trader for many reasons. There are many models to estimate the market impact of an order before executing it and many brokers have their own model, for example Deutsche Bank. There is considerable research on "market impact" if you are interested. I understand the general principal that when significant buy orders comes in relative to the sell orders price goes up and when a significant sell order comes in relative to buy orders it goes down. I consider this statement wrong or at least misleading. First, stocks can jump in price without or with very little volume. Consider a company that releases a negative earnings surprise over night. On the next day the stock may open 20% lower without any orders having matched for any price in between. The price moved because the perception of the stocks value changed, not because of buy or sell pressure. Second, buy and sell pressure have an effect on the price because of the underlying reason, and not necessarily/only because of the mechanics of the market. Assume you were prepared to sell HyperNanoTech stock, but suddenly there's a lot of buzz and your colleagues are talking about buying it. Would you still sell it for the same price? I wouldn't. I would try to find out how much they are prepared to buy it for. In other words, buy pressure can be the consequence of successful marketing of the stock and the marketing buzz is what changes the price. |
Can someone recommend a book that discusses the differences between types of financial statements? | Why Stocks go up and Down by William H Pike is a great source if you are looking to interpret statements for stock analysis. This book really starts from the beginning and clearly explains with a running example of a fake company. |
How is “The People's Trust” not just another Investment Trust? | Well the People's Trust's IPO prospectus is now (2017-09-08) available for all to read (or there's a smaller "information leaflet"). (May need some disclaimers to be clicked to get access). Both have a "highlights" bullet-point list: Coverage here has a comment thread with some responses by the founder attempting to answer the obvious objection that there's other multi-manager trusts on a discount (e.g Alliance Trust on ~ -5.5%), so why would you buy this one on a (very small) premium? (Update: There's also another recent analysis here.) Personally, I'm thinking the answer to the original question "How is The People's Trust not just another Investment Trust?" is pretty much: "it's just another Investment Trust" (albeit one with its own particular quirks and goals). But good luck to them. |
How can I pay for school to finish my degree when I can't get a student loan and have bad credit? | When considering such a major life decision, with such high potential costs and high potential rewards, I encourage you to consider multiple different potential options. Even if loans were available, they might not be the best option. Less debt and an engineering degree is better than more debt and an engineering degree, both of which are likely better than your current debt and no engineering degree. I encourage you to consider: revisit your aid (which is not just loans), cut expenses, consider alternative aid sources, use your engineering student status to get a better paying job (including more profitable summer employment), check for methods to cut down the cost of your degree, and double-check your plans to make sure you have a long-term plan that makes sense. The first issue, raised in the comments, is whether or not you are getting appropriate financial aid. This does not just mean loans, it includes grants and other forms of assistance. You should be getting in-state tuition, and by searching the tuition of UNC I believe you are. But for future readers, you should make sure you are getting in-state rates, and it not there are options to return to a state where you would get in-state tuition rates, or look into the possibility of pausing your study for one year until you meet in-state funding requirements. You should also ensure your FAFSA information is correct, including your income, family situation (whether or not you are an independent study, as it sounds like you probably are), etc. This effects how many grants you get, and if you are independent this changes maximum federal loan amounts (see website for details). While you don't say what your pay is, the fact that you are working two jobs and having trouble making ends-meet suggests either that you have a spending issue, or that your jobs pay sucks, and possibly both. I've been in both situations, and there are methods for dealing with both. If your spending is not very carefully controlled, that's a big issue. I won't try to rehash all the personal finance advice about this, but I will just warn that when you are desperate and you know there isn't enough money even if you spend perfectly, there is a strong tendency to just give up and not even try because what's the point? Learned helplessness is hell, but it can be overcome with effort and tightly holding on to any glimmer of hope you find to do better each day. If you are in a field like engineering or computing (and some other fields, though I am less personally familiar with the current employment climate in those), there are usually companies who want to hire you as a paid intern or part-time employee in the hopes of getting you when you graduate. Those last two semesters of undergrad are a technicality to employers, they know it doesn't really change your skill set much. Many companies are actually more interesting in hiring someone on who hasn't finished the degree yet than getting someone recently post-degree, because they can get you cheaper and learn if this is a good match before they have to take the big risk of full-time hiring. You need to use this system to your advantage. Its hard when you feel destitute, but talk with career councilors in your school, your department advisor, and/or main administrative staff in your main academic department. Make sure you are on the right mailing lists to see the job offers (many schools require you to subscribe to one because at a school like UNC it easily gets way too much traffic each day). You need field-relevant experience, not just to finish the degree, but to be able to really open up your job opportunities and earning potential. Do not be shy about directly calling/emailing a contact who reaches out to your school looking for "recent graduates", and especially any mention of flexibility on early start for those who are almost finished. You can say you are in your final year (you are), and even ask if they are open to working around a light school schedule while you finish up. Most can end up to be "no", but it doesn't matter - the recruiting contacts want to hire people, so just reaching out early means you can follow up later once you get your degree and finances sorted out and you will have an even easier time getting that opportunity. In technology and engineering, the importance of summer internships cannot be understated, especially as you are now technically at the end of your degree. In engineering and tech fields, internships pay - often very well. Don't worry about it being the job of your dreams. Depending on your set of skills, apply to insurance companies, IT departments in hospitals and banks (even if you thought your coding skills in engineering were minimal), and of course any paying position that might be more directly in your field of interest. Consider ones outside your immediate area or even the more national internships from the bigger name companies, where possible. It is not at all uncommon for tech and engineering internships for undergraduate students to pay $15-$25+ per hour, even where most non-degree jobs might only pay $8 (and I've seen as high as $40 per hour+ in the high cost of living markets, depending on your skill set). I know many people who were paid more as a student intern than they were previously paid as a full-time professional employee. Many schools - including UNC - charge different tuition for distance learning and satellite campuses, and often also offer University-approved online classes. While this is not always a possibility for every student, you should consider the options. It could be that one of the final classes you need towards your degree can be taken at one of these other options, with reduced tuition. This is not always possible with all courses, but is certainly true if you have any of those general education requirements to knock out. Also consider if any of those final requirements have test-out options, such as CLEP test alternatives. Again, not always available, but sometimes you can get class credit for a general education class for Finally, make sure you aren't paying unnecessarily for text books, once you do get the money for tuition. You can sometimes get hand-me-down copies, rent ebooks or physical books from online companies, creative searches for PDF copies, get your book from off-campus local stores, etc. It isn't tuition, but money is money. Attend Part-Time While Working Look into the option of being a half-time student, which is usually 6-8 credit hours, if you can't afford full-time tuition. There is generally a greatly reduced rate, you still qualify for aid programs, and you are still working towards the degree - so you still get access to student resources like internships and job listings that may not be publicly posted. Inquire About Scholarships and School Emergency Assistance While this varies hugely by institution, make sure you check into scholarships you can apply to (even if they are just a few hundred bucks, it helps a lot) in your school (I don't believe the big online searches help, ask the school - but YMMV). Also inquire about any sort of possible help the school provides to students who've had life emergencies, such as your medical issues. Many have programs that are not advertised, designed to help students finish their degree and recover from personal hard times. It's worth the inquiry if you are willing to ask. Any little bit of assistance can help. Don't be afraid to talk with an institution's mental health councilors either, who can help you deal with the psychological difficulty of your situation as well as often being able to connect you to other potential support resources. The pressure can take its tole, and you'll have better long-term opportunities if you build up your support network and options. Student Loan Forbearance While In School If you are trying to save up every last dollar for tuition to finish the degree, but you have to pay loans now, call up the provider to ask about temporary delays on your student loan payments. Many have time-limited hardship allowances, and between the medical bills, low income, and returning to school, they may be willing to give you a few months break until you get back to school and the in-school provisions kick in. Skip a Semester If Necessary To Save Money If you can only raise enough for one semester, then need to skip a semester to build up more funds, that happens, it's OK. Be strategic, and check on loan forbearance. Usually being out for one semester is allowed by student loan companies before you owe them payment, and if you re-enroll you don't have to start making payments yet. Double-check on Credit Expiration and Degree Requirements Make sure you talk to someone who knows what they are talking about, especially in terms of credit expiration. Policies vary, and sometimes an advisor is able to put in a special request to waive you through some of these issues. Academia is heavily, heavily reliant on developing a good relationship and clear communication with an advisor who is willing to work with you to achieve your goals. Written policies are sometimes very firm, and sometimes all you have to do is ask the right person and poof, suddenly the rules change. It's a weird system, but don't be afraid to explain your situation and ask what can be done. Don't assume a written policy is 100% ironclad - sometimes it is, but it often isn't. Inquire About Other Government and Community-based Assistance Being destitute is awful, and having to ask for help can feel terrible in it's own way, but doing what you have to do to have a better future can mean pushing through and being willing to ask for help. This can mean asking parents and close family if they can contribute to help you finish your degree, but this also means checking with your local community programs to see if you qualify for anything. Many communities have food pantries and related programs that will help you even if you don't qualify for something like SNAP (aka food stamps), because they know times can get hard for anyone and they want you to spend what little money you have on building a better life. Your university may even run a food pantry for students in need - use it. Get what assistance you can, minimize spending in any way you can manage, put all the money towards doing what you need to do to get to a better place. It's even nicely reciprocal - once you work through your hard times and get things on track, you can return the favor and help give back to programs like the ones that helped you. Make Sure Your Long-Term Goal Makes Sense Finally, this is all predicated on pulling out all the stops to finish your degree. But this assumes that this is a good plan. Not all degrees are helpful for all people in all areas of the country. Do your own research to make sure you aren't throwing good money after bad, and are pursuing a goal that will make sense for you and what you want. The cost of a degree keeps going up, but it remains true that many sets of skills and degree-holding candidates are in demand and can command high salaries that blow away the cost of college in comparison. If you actually have a good chance of going from struggling to make $8/hour to making $50k-90k a year, based on your developed skills, experience, and professional network, then reasonable student loan debt is a worthy investment. If, on the other hand, you wrack up tens of thousands of more dollars in debt just to say you did and still have to work the same kinds of jobs, that's not really much of an investment at all. Good luck on your journey, and best wishes towards better days - regardless of what path you choose. Finally, make sure you aren't paying unnecessarily for text books, once you do get the money for tuition. You can sometimes get hand-me-down copies, rent ebooks or physical books from online companies, creative searches for PDF copies, get your book from off-campus local stores, etc. It isn't tuition, but money is money. Look into the option of being a half-time student, which is usually 6-8 credit hours, if you can't afford full-time tuition. There is generally a greatly reduced rate, you still qualify for aid programs, and you are still working towards the degree - so you still get access to student resources like internships and job listings that may not be publicly posted. While this varies hugely by institution, make sure you check into scholarships you can apply to (even if they are just a few hundred bucks, it helps a lot) in your school (I don't believe the big online searches help, ask the school - but YMMV). Also inquire about any sort of possible help the school provides to students who've had life emergencies, such as your medical issues. Many have programs that are not advertised, designed to help students finish their degree and recover from personal hard times. It's worth the inquiry if you are willing to ask. Any little bit of assistance can help. Don't be afraid to talk with an institution's mental health councilors either, who can help you deal with the psychological difficulty of your situation as well as often being able to connect you to other potential support resources. The pressure can take its tole, and you'll have better long-term opportunities if you build up your support network and options. If you are trying to save up every last dollar for tuition to finish the degree, but you have to pay loans now, call up the provider to ask about temporary delays on your student loan payments. Many have time-limited hardship allowances, and between the medical bills, low income, and returning to school, they may be willing to give you a few months break until you get back to school and the in-school provisions kick in. If you can only raise enough for one semester, then need to skip a semester to build up more funds, that happens, it's OK. Be strategic, and check on loan forbearance. Usually being out for one semester is allowed by student loan companies before you owe them payment, and if you re-enroll you don't have to start making payments yet. Make sure you talk to someone who knows what they are talking about, especially in terms of credit expiration. Policies vary, and sometimes an advisor is able to put in a special request to waive you through some of these issues. Academia is heavily, heavily reliant on developing a good relationship and clear communication with an advisor who is willing to work with you to achieve your goals. Written policies are sometimes very firm, and sometimes all you have to do is ask the right person and poof, suddenly the rules change. It's a weird system, but don't be afraid to explain your situation and ask what can be done. Don't assume a written policy is 100% ironclad - sometimes it is, but it often isn't. Being destitute is awful, and having to ask for help can feel terrible in it's own way, but doing what you have to do to have a better future can mean pushing through and being willing to ask for help. This can mean asking parents and close family if they can contribute to help you finish your degree, but this also means checking with your local community programs to see if you qualify for anything. Many communities have food pantries and related programs that will help you even if you don't qualify for something like SNAP (aka food stamps), because they know times can get hard for anyone and they want you to spend what little money you have on building a better life. Your university may even run a food pantry for students in need - use it. Get what assistance you can, minimize spending in any way you can manage, put all the money towards doing what you need to do to get to a better place. It's even nicely reciprocal - once you work through your hard times and get things on track, you can return the favor and help give back to programs like the ones that helped you. Finally, this is all predicated on pulling out all the stops to finish your degree. But this assumes that this is a good plan. Not all degrees are helpful for all people in all areas of the country. Do your own research to make sure you aren't throwing good money after bad, and are pursuing a goal that will make sense for you and what you want. The cost of a degree keeps going up, but it remains true that many sets of skills and degree-holding candidates are in demand and can command high salaries that blow away the cost of college in comparison. If you actually have a good chance of going from struggling to make $8/hour to making $50k-90k a year, based on your developed skills, experience, and professional network, then reasonable student loan debt is a worthy investment. If, on the other hand, you wrack up tens of thousands of more dollars in debt just to say you did and still have to work the same kinds of jobs, that's not really much of an investment at all. Good luck on your journey, and best wishes towards better days - regardless of what path you choose. |
Prepaying a loan: Shouldn't the interest be recalculated like a shorter loan? | If you take a loan, you make a contract with your lender, let's call them "bank" (even if it might not be a real bank). This loan contract contains an agreed-upon way of paying back the loan. Both sides agreed upon these conditions. Any change of it (like paying back early) needs the consent of both sides. So, in general, no, you cannot just pay back everything earlier unless the other side accepts this change of the contract. Consider it from the bank's point of view: They want to earn money by getting the interest you have to pay when you pay back everything nice and slowly. It is their business. They plan on these expected revenues etc. So if, for whatever reason, you have to pay back the whole remaining loan at once, you create a revenue loss for the bank and are liable for this financial damage. In German the term for this is "Vorfälligkeitsentschädigung" which translates to "prepayment penalty" or "acceleration fee". You just have to pay it, so in the end you come out like if you were paying back the loan in the agreed-upon fashion. However, many loan contracts contain the option to pay back early at specific points in time in specific amounts and under specific conditions. |
How do I find an ideal single fund to invest all my money in? | In the past 10 years there have been mutual funds that would act as a single bucket of stocks and bonds. A good example is Fidelity's Four In One. The trade off was a management fee for the fund in exchange for having to manage the portfolio itself and pay separate commissions and fees. These days though it is very simple and pretty cheap to put together a basket of 5-6 ETFs that would represent a balanced portfolio. Whats even more interesting is that large online brokerage houses are starting to offer commission free trading of a number of ETFs, as long as they are not day traded and are held for a period similar to NTF mutual funds. I think you could easily put together a basket of 5-6 ETFs to trade on Fidelity or TD Ameritrade commission free, and one that would represent a nice diversified portfolio. The main advantage is that you are not giving money to the fund manager but rather paying the minimal cost of investing in an index ETF. Overall this can save you an extra .5-1% annually on your portfolio, just in fees. Here are links to commission free ETF trading on Fidelity and TD Ameritrade. |
What steps should be taken, if any, when you find out your home's market value is underwater, i.e. worth less than the mortgage owed? | I will echo the others; your home should be worth more to you than its market value. It is YOUR HOME. It's where you come home every day to your wife and kids, where you build a life. Yes it's an investment, but it's not like a stock or bond that you hold for a little while and then cash out for the profit. The one time you should be worried about being "upside-down" on your mortgage is if you're getting out. If you're moving to a new job at a new company in a new city, you have to make good on the remaining loan balance, and that won't all be from the sale of the house. Unless you're at that point however, if you can afford making the payments and have no reason to move or to cash in equity (of which you have none), then just keep making the payments. Hey, it's better than rent; you'll never see rent money again, while even if you're underwater, you're making headway with each payment. |
Transferring money between two banks | The US (in fact the global) banking industry is subject to Anti-Money Laundering & Counter-Terrorism funding laws, slowing down funds transfer eliminates a great deal of fraud. |
Should I pay off my student loans or keep it in the bank? [duplicate] | Many years ago I heard a multi-level marketing pitch that pointed out how many doctors don't get out of debt until they are well into their 50's. The selling point was that you can get rich quick, as rich as a doctor, with nothing more then a bit of elbow grease. Of course the pitch failed to mention that most doctors, buy the things doctors buy, when they get that first big job. The big house, expensive cars nerf the income that they receive and they are probably stuck with years of student loan payments. I assume that you are one of the "lucky" ones that have graduated college with a well paying job. By lucky I mean you concentrated on obtaining a skill for which the marketplace has a need. Why not continue to live like a college student for a few more months and pay off all of your student loans ASAP? Get rid of them like you were purging the phone number of that high maintenance girl you dated during a short time of insanity. |
Micro-investing: How to effectively invest frequent small amounts of money in equities? | Compound interest is your friend. For such a low amount of cash, just pop it into savings accounts or deposits. When you reach about 1.500€ buy one very defensive stock that pays high dividends. With deposits, you don't risk anything, with one stock, you can lose 100% of the investment. That's why it's important to buy defensive stock (food, pharma, ...). Every time you hit 1.500€ after, buy another stock until you have about 10 different stock in different sectors, in different countries. Then buy more stock of the ones you have in portfolio. You're own strategy is pretty good also. |
Repaying Debt and Saving - Difficult Situation | Your mother has a problem that is typical for a woman with children. She is trying to help her children have a good life, by sacrificing to get them to a point where they can live comfortably on their own. Though she has a difficult situation now, much of the problems come from a very few choices by her and her children, and her situation can be fixed. Let me point out a few of the reasons why she has come to this point: My mother is a single mom... she is turning 50 this summer... she has about $60k in school loans from the college I attended... she has payments of $500/month ($10k) to my sisters college... she lives on her own in a 2 bedroom apartment... Mother's current 'income statement', Income Essentials (total $3131, 71%, too high, goal $2200) Lifestyle (total $150, low, she should have $500-900 to live her life) Financial (total $1350, 31%) Some observations and suggestions: Even though the $1625 rents seems high, your mom might enjoy her apartment and consider part of her rent ($300) a lifestyle choice (spending money for time), and the higher rent may make sense. But the rent is high for her income. Your mom should be spending more on food, and budget $200/month. Your mom should be saving money for investments and retirement. She should be putting 10% into savings ($440), plus any IRA/401K pretax savings. Your sister should be paying for her own college. She should take her own student loans, so that her mother can save for retirement. And since she only has $10K left, an alternative would be that you could loan her the money, and she could repay you when she graduates (you have money, as you loaned your mother $8K). You should be repaying the $500/month on the $60K student loan your mother took to help you get through college. You have benefited from the education, and the increased opportunity the college education has given you. Now is the time to accept responsibility and pay your debts. You could at least agree to split the expense with her, and were you paying even $300/month (leaving $200 for her), that would still fix her budget. Your mom should get a car that is paid for and reduce her transportation expenses, until the $350/month debt is resolved. She should resolve to spend no more than $300/month for a car, and with $100/month for insurance be under 10% for her vehicle. Since your mother lives in the US (NJ) she could avoid the $350/month debt payment though BK. But since there are other solutions she could exercise to resolve her problems, this is probably not needed. You mom could consider sharing her apartment to share expenses. Paying $1625 for an apartment for one person seems extravagant. She might enjoy sharing her apartment with a room-mate. That is about it. Once her children take responsibility for their lives, your mom will have a manageable budget, and less stress in her life. Mother's revised 'income statement', Income Essentials (total $2721, 62%, high, need to reduce by $500) Lifestyle (total $450, 10%, low) Financial (total $990, 23%) While you and your sister have these changes, Summary of changes: Some rent is lifestyle, reduced car loan by $200, sister pays her college $500, you pay your college $300, mom saves 10% of her income. Once your sister graduates and starts to repay you for your help with her college, you can take over paying the remainder of your loans, saving your mom an additional $200/month. |
How to get a down payment for your next home? Use current home as the down payment on the new one? | I know you've clarified that you're in the US, but in case anyone else comes across this question: in the UK this is completely normal (including if you still have outstanding mortgage on your current home). We end up with long "chains" of buyers and sellers all completing / moving on the same day so that the proceeds from one sale can be used as the downpayment on the next. |
Is this follow-up after a car crash a potential scam? | Do not give them any money until you have a signed contract that releases your liability completely. It's imperative that this contract be drafted correctly. The contract needs proper consideration (money in exchange for release of liability), among other things. In other words, talk to a lawyer if you want to go this route. If you just cut them a check, there's nothing stopping them from taking your money and making an insurance claim anyway, or taking your money and then suing for "whiplash" or some other fake injury. The best way is just to go through insurance. It might cost a bit more, but you're covered in case they sue. |
How can I invest my $100? | There are websites out there that let people apply for micro-loans, and let other people fund those loans, and get a percent of the interest back as the loans are paid off. I have heard of people with spare cash "investing" in these sites. However, I don't think there is a guarantee of return of your money, and I have heard mixed reviews by people, so I will not link to any such sites here. |
First job: Renting vs get my parents to buy me a house | No one has considered the tax write off at the end of the year? Will the house be in the parent's name or his, and can one of them take a write off for taxes and interest at the end of each year? On a small salary this may mean he has no tax liability for the four years, and can possibly make up the extra buying costs.... also, look at the comps in the area for the past five years and see if home values have increased and turnover rate for the area will tell you if people are buying in that area... |
How smart is it to really be 100% debt free? | If you can borrow for an asset that gives you income that's more than the cost of carrying the debt, then go for it. But the kinds of debts you have now aren't those kinds of debt, so get rid of them. |
Isn't an Initial Coin Offering (ICO) a surefire way to make tons of money? | Given your premise is correct: How do you cash in a large sum of YetAnotherCryptoCoin shortly after it´s ICO? The crypto-exchanges take some time to add a new currency, if they do at all. And even if they already have, trading volume is usually low. I think that´s what really makes it unattractive for Investors as opposed to tec-enthusiasts (aside from the high volatility). Total lack of any reliable trading capability. |
What effect will the financial reform bill have on everyday Americans? | The Wall Street Journal says in its "For Consumers" section of its infographic: There's also some new agencies (including a "consumer watchdog agency"), and some new rules the SEC can implement, and it lets state pass more laws affecting national banks, but it doesn't look like there's much in particular that it does for consumers right away. Source - http://online.wsj.com/article/SB10001424052748704569204575329211031691230.html |
Why do employers require you to spread your 401(k) contributions throughout the year to get the maximum match? | If one makes say, $10K/mo, and the company will match the first 5% dollar for dollar, a 10%/mo deposit of $1K/mo will see a $500/mo match. If the employee manages to request 90% get put into the 401(k), after 2 months, he's done. If the company wished, they could continue the $500/mo match, I agree. They typically don't and in fact, the 'true up' you mention isn't even required, one is fortunate to get it. Many companies that match are going the other way, matching only after the year is over. Why? Why does any company do anything? To save money. I used to make an attempt to divide my deposit over the year to max out the 401(k) in December and get the match real time, not a true up. |
CD interest rate US vs abroad, is there a catch? | Part 1 Quite a few [or rather most] countries allow USD account. So there is no conversion. Just to illustrare; In India its allowed to have a USD account. The funds can be transfered as USD and withdrawn as USD, the interest is in USD. There no conversion at any point in time. Typically the rates for CD on USD account was Central Bank regulated rate of 5%, recently this was deregulated, and some banks offer around 7% interest. Why is the rate high on USD in India? - There is a trade deficit which means India gets less USD and has to pay More USD to buy stuff [Oil and other essential items]. - The balance is typically borrowed say from IMF or other countries etc. - Allowing Banks to offer high interest rate is one way to attract more USD into the country in short term. [because somepoint in time they may take back the USD out of India] So why isn't everyone jumping and making USD investiments in India? - The Non-Residents who eventually plan to come back have invested in USD in India. - There is a risk of regulation changes, ie if the Central Bank / Country comes up pressure for Forex Reserves, they may make it difficut to take back the USD. IE they may impose charges / taxes or force conversion on such accounts. - The KYC norms make it difficult for Indian Bank to attract US citizens [except Non Resident Indians] - Certain countries would have explicit regulations to prevent Other Nationals from investing in such products as they may lead to volatility [ie all of them suddenly pull out the funds] - There would be no insurance to foreign nationals. Part 2 The FDIC insurance is not the reason for lower rates. Most countires have similar insurance for Bank deposits for account holdes. The reason for lower interst rate is all the Goverments [China etc] park the excess funds in US Treasuries because; 1. It is safe 2. It is required for any international purchase 3. It is very liquid. Now if the US Fed started giving higher interest rates to tresaury bonds say 5%, it essentially paying more to other countries ... so its keeping the interest rates low even at 1% there are enough people [institutions / governemnts] who would keep the money with US Treasury. So the US Treasury has to make some revenue from the funds kept at it ... it lends at lower interest rates to Bank ... who in turn lend it to borrowers [both corporate and retail]. Now if they can borrow cheaply from Fed, why would they pay more to Individual Retail on CD?, they will pay less; because the lending rates are low as well. Part 3 Check out the regulations |
What are the pros and cons of investing in a closed-end fund? | Pro: - Faces less redemption pressure and hence the Fund Manager can focus more on long term gains rather than immediate gains. - Works well in emerging markets. - Less churn out in case the market falls sharply, there by making more money in long run. Cons: - No additional money to invest/take advantage of market situation. - Less liquid for investor as he is locked in for a period. |
Is the ESPP discount profit? | The difference is ordinary income. If the price drops and you sell for exactly what you paid, you have an income of D and a capital loss of D which usually cancel each other, but not always. For example, if you already have over $3000 in losses, this loss won't help you, it will carry forward. The above changes a bit if you hold the stock for 2 years after the beginning of the purchase period. If sold between your purchase price and fair market the day you bought, the gain is only the difference, no gain to fair market + loss. Pretty convoluted. Your company should have provided you with a brief FAQ / Q&A to explain this. My friends at Fairmark have an article that explains the ESPP process clearly, Tax Reporting for Qualifying Dispositions of ESPP Shares. |
What is insider trading exactly? | Insider trading is any trading done on material non-public information relating to an instrument. If my sister, who works for a drugs testing company, tells me that stage 3 trials of a drug look like they will fail and I trade on that information (probably by shorting a company's stock) that is insider trading. If an employee of that firm trades on that same stock knowing that the trials are likely to fail that is too. If an employee of that company trades on the stock without knowing that information that is NOT insider trading. If I know from an insider I met at the pub that a large orange producer has seen a fall in production due to a blight and I trade on oranges futures, even though I am not directly trading in the stock it is still insider trading. I mentioned that the information must be material, that means that it must have the potential to move the market; if I know that a firm is going to increase profits by 10% this year it is not material if analyst expectations are for a similar rise. You are right that small scale insider trading, such as by employees and their families, is relatively unregulated and unchecked but directors and C-level employees of a firm are required to publish all and any dealings that they have in the stock and several have been caught and penalized for insider trading. edit: http://www.sec.gov/spotlight/insidertrading/cases.shtml details some cases, many involving director and C-level employees, that the SEC has prosecuted recently. Incidentally I work in financial fraud monitoring and we use an analytic based on previous days' trades and today's news (i.e. when the information becomes public) to identify traders who might either be indulging in or receiving orders to trade on insider information. Essentially this works by looking for large changes in position against an instrument that later has material information releases relevant to it. One final thing to think about: given that being caught will generally cause perpetrators to go to prison and be banned from director level jobs and/or trading for life as well as a large, life-changing fine and a massive loss of reputation not many people with insider information want to risk trading on it, myself included. |
How to invest in a currency increasing in value relative to another? | On international stock exchanges, they trade Puts and Calls, typically also for currencies. If for example 1 NOK is worth 1 $ now, and you buy Calls for 10000 NOK at 1.05 $ each, and in a year the NOK is worth 1.20 $ (which is what you predict), you can execute the Call, meaning 'buying' the 10000 NOK for the contracted 1.05 $ and selling them for the market price of 1.20 $, netting you 12000 - 10500 = 1500 $. Converting those back to NOK would give you 1250 NOK. Considering that those Calls might cost you maybe 300 NOK, you made 950 NOK. Note that if your prediction is common knowledge, Calls will be appropriately priced (=expensive), and there is little to make on them. And note also that if you were wrong, your Calls are worth less than toilet paper, so you lost the complete 300 NOK you paid for them. [all numbers are completely made up, for illustration purposes] You can make the whole thing easier if you define the raise of the NOK against a specific currency, for example $ or EUR. If you can, you can instead buy Puts for that currency, and you save yourself converting the money twice. |
How do I calculate two standard deviations away from the stock price? | The formula for standard deviation is fairly simple in both the discrete and continuous cases. It's mostly safe to use the discrete case when working with adjusted closing prices. Once you've calculated the standard deviation for a given time period, the next task (in the simplest case) is to calculate the mean of that same period. This allows you to roughly approximate the distribution, which can give you all sorts of testable hypotheses. Two standard deviations (σ) away from the mean (μ) is given by: It doesn't make any sense to talk about "two standard deviations away from the price" unless that price is the mean or some other statistic for a given time period. Normally you would look at how far the price is from the mean, e.g. does the price fall two or three standard deviations away from the mean or some other technical indicator like the Average True Range (an exponential moving average of the True Range), some support level, another security, etc. For most of this answer, I'll assume we're using the mean for the chosen time period as a base. However, the answer is still more complicated than many people realize. As I said before, to calculate the standard deviation, you need to decide on a time period. For example, you could use S&P 500 data from Yahoo Finance and calculate the standard deviation for all adjusted closing prices since January 3, 1950. Downloading the data into Stata and applying the summarize command gives me: As you can probably see, however, these numbers don't make much sense. Looking at the data, we can see that the S&P 500 hasn't traded close to 424.4896 since November 1992. Clearly, we can't assume that this mean and standard deviation as representative of current market conditions. Furthermore, these numbers would imply that the S&P 500 is currently trading at almost three standard deviations away from its mean, which for many distribution is a highly improbable event. The Great Recession, quantitative easing, etc. may have changed the market significantly, but not to such a great extent. The problem arises from the fact that security prices are usually non-stationary.. This means that the underlying distribution from which security prices are "drawn" shifts through time and space. For example, prices could be normally distributed in the 50's, then gamma distributed in the 60's because of a shock, then normally distributed again in the 70's. This implies that calculating summary statistics, e.g. mean, standard deviation, etc. are essentially meaningless for time periods in which prices could follow multiple distributions. For this and other reasons, it's standard practice to look at the standard deviation of returns or differences instead of prices. I covered in detail the reasons for this and various procedures to use in another answer. In short, you can calculate the first difference for each period, which is merely the difference between the closing price of that period and the closing price of the previous period. This will usually give you a stationary process, from which you can obtain more meaningful values of the standard deviation, mean, etc. Let's use the S&P500 as an example again. This time, however, I'm only using data from 1990 onwards, for the sake of simplicity (and to make the graphs a bit more manageable). The summary statistics look like this: and the graph looks like this; the mean is the central horizontal red line, and the top and bottom lines indicate one standard deviation above and below the mean, respectively. As you can see, the graph seems to indicate that there were long periods in which the index was priced well outside this range. Although this could be the case, the graph definitely exhibits a trend, along with some seemingly exogenous shocks (see my linked answer). Taking the first difference, however, yields these summary statistics: with a graph like this: This looks a lot more reasonable. In periods of recession, the price appears much more volatile, and it breaches the +/- one standard deviation lines indicated on the graph. This is only a simple summary, but using first differencing as part of the wider process of detrending/decomposing a time series is a good first step. For some technical indicators, however, stationary isn't as relevant. This is the case for some types of moving averages and their associated indicators. Take Bollinger bands for instance. These are technical indicators that show a number of standard deviations above and below a moving average. Like any calculation of standard deviation, moving average, statistic, etc. they require data over a specified time period. The analyst chooses a certain number of historical periods, e.g. 20, and calculates the moving average for that many previous periods and the moving/rolling standard deviation for those same periods as well. The Bollinger bands represent the values a certain number of standard deviations away from the moving average at a given point in time. At this given point, you can calculate the value two standard deviations "away from the value," but doing so still requires the historical stock price (or at least the historical moving average). If you're only given the price in isolation, you're out of luck. Moving averages can indirectly sidestep some of the issues of stationarity I described above because it's straightforward to estimate a time series with a process built from a moving average (specifically, an auto-regressive moving average process) but the econometrics of time series is a topic for another day. The Stata code I used to generate the graphs and summary statistics: |
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